How does the supervision effect affect the firm’s performance in Taiwanese stock market?
Tsung-Yu Hsieh, Tsai-Yin Lin, Fangjhy Li, Chih-Yun Tien
TL;DR
This paper examines how a CEO's dual role as an independent director affects company performance in Taiwan's stock market.
Contribution
The study introduces a novel perspective on the CEO's supervisory role and its impact on firm performance metrics.
Findings
A CEO serving as an independent director significantly improves firm performance.
Supervisory roles positively influence Return on Equity and Tobin’s Q.
Dual roles enhance performance regardless of CEO-director relationships.
Abstract
This paper explores the impact of the CEO’s supervisory role as an independent director on firm performance, utilizing measures such as Return on Equity (ROE) and Tobin’s Q. The supervisory effect is assessed through the remuneration of directors and supervisors. Empirical findings indicate a significant supervisory role when the CEO also serves as an independent director. Whether viewed from the perspective of shareholders’ equity or company growth, the CEO’s involvement as an independent director positively influences firm performance. Furthermore, the concurrent roles of CEO and independent director contribute to enhanced firm performance, irrespective of their relationship.
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Taxonomy
TopicsCorporate Finance and Governance · Auditing, Earnings Management, Governance · Working Capital and Financial Performance